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What is the accounting entry when an order is received?

Author:
Harold Averkamp, CPA, MBA

There is no accounting entry recorded in a company’s general ledger accounts when an order is received.

The reason is that a sale or sales revenues has not yet occurred, nor does the company have an accounts receivable at this point. Generally, the sale and the related receivable occur when the goods are shipped (FOB shipping point) or when the goods are received by the customer (FOB destination).

While there is no accounting entry in the general ledger, it is likely that the company will create a record outside of the general ledger to track the order and to schedule various activities that will be needed to ship the products to the customer.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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